Health and Human Services Secretary Alex Azar's testimony on the Hill made it clear the Trump drug pricing blueprint isn't getting much love.
Azar appeared Tuesday, June 12, before the Senate Committee on Health, Education, Labor and Pensions. While plenty of partisan politics was on display, what was clear is that the pricing plan has raised more questions than provided answers. In his testimony, Azar reiterated elements of the blueprint, supported the plan and gave a spirited defense of Trump's promise to lower drug prices in the face of pushback from committee members who pointed to a lack of progress on the issue since the President took office.
Predictably, Republican committee members mostly presented Azar easy queries and questions that teed up the administration's talking points. In turn, Democrats often found fault with the blueprint as well as the fact that while President Trump has talked tough about drug companies, the blueprint has no tools or requirements that would treat the companies in a serious manner to force prices lower.
Azar also focused on the need to eliminate rebates from the drug pricing system used by drug companies and pharmacy benefit managers, or PBMs. Often a PBM such as CVS Health Corp. (CVS - Get Report) or Express Scripts Holding Co. (ESRX) will call for a percentage rebate from drugmakers to include a medication in its formulary, which can lead to drug companies increasing the list price of a drug to boost the bottom line in light of the rebate payment. As the rebate rises, so does the list price, with patients paying more and the PBM pocketing some if not all of the rebate increase.
"We may need to move toward a system without rebates, where PBMs and drug companies just negotiate fixed-price contracts. Such a system's incentives, detached from artificial list prices, would likely serve patients far better."
While PBMs have come under fire from the Trump administration, they also are being painted as villains by drug companies regarding high medication costs.
"It was great to hear Secretary Azar emphasize the need to reform the role played by PBMs," said Lindsay Bealor Greenleaf, a director at advisory firm ADVI Health, via email. "But his plan for moving Medicare Part B drug coverage into Part D is concerning."
An Express Scripts representative said the company "is committed to working with the administration, drug manufacturers and other stakeholders to lower prescription drug list prices for patients and payers."
CVS did not respond to a request for comment about rebates.
Chairman Lamar Alexander, R-Tenn., said his complaint about rebates is that they make it difficult to identify how much money is truly being spent on prescription drugs. Alexander also pledged to work with Azar to change laws to help support the effort to bring drug prices down.
It's ironic that Alexander as well as other members of the committee pledged to create legislation to back the blueprint since the Trump administration created the document as a way to go around the House and the Senate, two bodies the administration sees as being in the way.
Predictably, one of Trump's strongest critics was Sen. Elizabeth Warren, D-Mass. Warren asked Azar pointedly about the president's promise two weeks ago that there would be an announcement about voluntary drug price reductions made by drug companies as a result of the administration's efforts.
In a bill signing ceremony May 30, Trump hinted changes in drug pricing were on the horizon.
"You're going to have some big news," the president said. "I think we're going to have some of the big drug companies in two weeks say they're going to announce, because of what we did, they're going to announce voluntary massive drops in prices."
Warren said her office reached out to the 10 largest drug companies to ask if they were going to be making voluntary reductions and those companies told her no. She asked if any of the companies planned to drop prices in the future, and again she was told no. Warren did say one of the companies said she should count on prices going up.
Azar took exception to Warren's question and tried talking over her while defending the blueprint as an effective way to bring drug prices down.
Thus far, no drug companies have made public announcements regarding voluntarily rolling prices back in association with Trump's pronouncement.
Warren previously had sent a 12-page letter to Azar outlining her concerns with the blueprint.
Sen. Bernie Sanders, I-Vermont, chastised Azar for failing to make a connection between high drug prices keeping patients from filling prescriptions or else rationing their drugs and patients dying from not taking the drugs.
"Have you done a study on that yet?" Sanders asked Azar.
Azar didn't take the bait, though, staying on message and defending the difficulty of lowering drug prices, saying that what the administration is doing amounts to redesigning how the whole drug pricing system works.
"That isn't going to happen in a couple of weeks," Azar said.
Azar, along with the Food and Drug Administration and the Centers for Medicare and Medicaid Services, have made some policy changes since rolling out the blueprint May 11.
They included listing name-brand drug companies that have interfered with generic companies trying to purchase drugs to make generic versions of, as well as forming a working group at the FDA to figure out how to force pharmaceutical companies to include list prices for drugs in direct-to-consumer TV commercials. The thinking is that since drug companies spend so much on TV advertising ($3.45 billion last year), the inclusion of price might cause some companies to lower prescription charges.
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